Travelling and Credit Cards

Be aware - if you take the wrong credit card with you on holiday overseas, you could end up paying significant amounts in hidden charges. This is due to currency conversion charges, also known as "foreign currency loading fees".

The extra cost of purchases totalling, say, £300 plus three £100 cash withdrawals overseas (not advisable), incurs an additional 10% on top of the usual interest charges of Lloyds TSB, HSBC credit cards or Halifax debit card - from the moment the cash withdrawals are made.

The card issuers form what is called a negative payment hierarchy, in which you - the valued customer - pay interest on all of your spending and cash withdrawals until your entire balance, including any 0% balance transfers - is paid off.

One piece of plastic that does not incur any such charge, let alone the extortionate amounts mentioned above, is Nationwide Building Society's own credit card. Unlike most other credit card companies, Nationwide does not charge fees for purchases, which means your money will go further. It will, though, charge a 2% transfer fee (minimum £2) if you use the card to take money out of an ATM.

Using a credit card to make cash withdrawals should be reserved for absolute emergencies. It is the personal finance equivalent of white socks with black shoes (or perhaps white socks per se, other than for sporting endeavours…). Debit cards are designed for cash withdrawals and the Nationwide debit card will charge nothing for withdrawals.

The UK government and the Federation of Tour Operators have come up with the Every Lesson Counts scheme to encourage parents not to take their children on holiday during school terms. The participants, including Airtours, British Airways Holidays, Cosmos, Thomas Cook and Virgin Holidays, offer discounted deals and free child places during school holidays.

These still may not be the cheapest deals, so it still pays to shop around before booking, but it might take some of the edge off feeling exploited because the school-age family want to take a holiday together.